$93 Million Liquidated In 1 Hour

Data shows a considerable amount of shorts have been liquidated within the Bitcoin futures market up to now day as BTC pushes above $19,000.

$93 Million Bitcoin Shorts Were Wiped Out In Just one Hour

As per data from the on-chain analytics firm Glassnode, short liquidations have spiked up to now day. A “liquidation” takes place when a derivative exchange has to forcibly close up a contract on the Bitcoin futures market.

Contracts often liquidate when a certain percentage of the margin – the collateral amount that the holder needed to put up with the intention to open the position, is lost because of the BTC price moving opposite to the direction the investor bets on.

Within the crypto futures market, large liquidations happening directly isn’t an unusual sight because of a few reasons. First, a lot of the assets within the sector are generally very volatile, so sudden price swings can happen abruptly.

And second, many derivative exchanges offer leverage (a loan amount taken against the margin) as high as 100x in the unique position. High leverage being accessible in a volatile environment like this ends in a big risk of positions being liquidated.

Now, the relevant indicator here is the “total futures liquidations,” which tracks the full amount of each short and long liquidations which can be going down within the Bitcoin futures market currently.

Here’s a chart that shows the trend on this metric over the previous couple of months:

The worth of the metric seems to have been deep red in recent days | Source: Glassnode on Twitter

As displayed within the above graph, the Bitcoin futures liquidations have mostly involved short contracts in the previous couple of days. This trend is smart, as a pointy upwards move in the value was the trigger for these liquidations.

Throughout the FTX crash back in November, which observed the alternative sort of price move, numerous longs were worn out as a substitute, as will be seen from the chart.

Normally, a big enough rapid move in the value can trigger simultaneous mass liquidations that only feed said price move further. This amplified price move then liquidates much more contracts, and in this fashion, liquidations cascade together. A mass liquidation event like that is popularly called a “squeeze.”

Glassnode notes that $93 million in brief contracts were flushed in only a single hour throughout the past day. These rapid liquidations suggest the Bitcoin rally triggered a brief squeeze within the futures market.

The value has now shot up much more following this squeeze, as is usually the case, and BTC is now above $19,000 for the primary time because the collapse of the crypto exchange FTX.

BTC Price

On the time of writing, Bitcoin is trading around $19,000, up 13% within the last week.

Bitcoin Price Chart

Looks like BTC has climbed up within the last couple of days | Source: BTCUSD on TradingView

Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com

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